The $2.3bn (€2bn) Houston Municipal Employees Pension System has allocated $20m to Kildare European Partners II, an opportunistic real estate fund managed by Kildare Partners.

The fund is targeting at least a 14% net return, according to a property manager search summary and recommendation that Courtland Partners presented in May to the Texas Municipal Retirement System.

As reported in April, Kildare, founded by former Lone Star Funds president and Sunderland football club owner Ellis Short, has a $2.5bn cap for the European Partners II fund.

Courtland said the EU market presented a significant opportunity for Kildare, with more than $2trn of non-core European commercial real estate on bank balance sheets.

Kildare II focuses on Germany, the Netherlands, the UK and Italy.

Kildare’s “principal strategy is to access commercial real estate debt and equity investments through distressed assets”, Courtland said.

Kildare looks at performing, sub-performing and non-performing loans secured directly or indirectly by commercial property, which the manager can buy at a discount and work out of distress.

Courtland said Kildare’s “in-house special servicer”, Curzon Advisers, was one reason to invest with the manager.

Curzon, formed in 2013, has around $2.8bn in assets under management, with property assets comprising 72% of the total, and the balance comprising non-performing loans.

Prior to acquisition, Curzon focuses on underwriting, valuation and due diligence.

Post-closing, it provides portfolio-management services, including servicing performing, sub-performing and non-performing loans.

According to Preqin, Kildare’s second European fund was the fourth-largest property debt fund in the process of raising capital, as of July, targeting $2bn.

Kildare held a first close for European Partners II in June, with backing from Texas Municipal ($100m), Texas Permanent School Fund State Board of Education ($75m), New Mexico Educational Retirement Board ($40m) and the Houston Firefighters’ Relief and Retirement Fund ($25m).